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Operators in SSA should attend to the needs of the low-end segment to reinforce their smartphone supply role

Karim Yaici Senior Analyst, Research

"Operators should introduce promotions and financing schemes to appeal to smartphone buyers and to strengthen their own role in smartphone distribution in Sub-Saharan Africa."

The increasing availability and affordability of smartphones represent the key drivers of growth for data services in Sub-Saharan Africa (SSA). In addition, operators are motivating subscribers to acquire new handsets with more features by developing their 3G and 4G networks and offering tariff plans that encourage data usage.

We forecast that smartphone penetration of the population in SSA will increase from 20% in 2016 to 35% by 2021, supported by the growing availability of entry-level handset models. However, the position that operators hold as the primary channel for the acquisition of such devices is weakening due to increased competition from retailers and a consumer shift to online channels in markets characterised by high prepaid penetration. This comment uses results from a recently conducted consumer survey to assess the role of operators in smartphone sales and to establish the extent to which the choice of handset can be an indicator of the level of spend on services and data usage. We will also share highlights from our new smartphone forecast for the region.

Consumers in Sub-Saharan Africa prefer non-operator channels for their handset purchases, except in South Africa

According to our survey of smartphone users conducted in Sub-Saharan Africa in August and September 2016, consumers often choose non-operator channels for their handset purchases. For example, in Ghana and Nigeria, operator channels accounted for 16% of all handset sales (see Figure 1). We also found that nearly half of the handsets bought were under USD100, which reinforces the importance and prevalence of low-cost handsets, often referred to as the 'sub-USD100' category.

In South Africa, the situation is different because of the higher spending power of the population, more-mature data propositions, and operators' active role in device bundling and financing (all mobile operators that bundle services and devices for postpaid customers have long-term instalment plans in place). In addition, of all the countries in the region, consumers in South Africa spend the most on handsets – at above USD250. This could be attributed to the fact that service and device prices at operator channels are not transparent, contributing to a perceived reduction in spend on handsets.

Figure 1: Channel used for last handset purchase, Nigeria, Ghana, Kenya and South Africa, 2016 (n = 4000)

Consumers' choice of handset is correlated with their level of spend on mobile services and data usage

To better understand the impact and appeal of low-cost devices in the region, we have compared the ways that consumer behaviour changes in line with device brands and capabilities.1

We found that the low-end brand Tecno captures more share (relative to its overall market share) within segments that spend less than USD5 for their mobile services and use less than 1GB of mobile data per month. Infinix users are more evenly distributed across the mobile spend and data usage categories. More generally, prepaid data usage for sub-USD100 handset users was lower than the prepaid market average data usage.

Unsurprisingly, Apple's share is higher among our high-spend respondents that consume large amounts of mobile data. Samsung users follow a similar distribution pattern to Infinix and Tecno users, with less representation in higher-end segments.

Smartphone sales in Sub-Saharan Africa will grow strongly, driven by first-time buyers and the proliferation of low-cost devices

We believe that only 20% of the region's population used smartphones in 2016. We expect this to increase to 35% by 2021.2 This will be driven in part by network expansion to rural areas, which is being incentivised by several governments in SSA.

Figure 2: Mobile handset connections by type, Sub-Saharan Africa, 2013, 2016 and 2021

There are at least three factors that will drive the demand for smartphones in the region.

  • Increased availability of budget smartphones. Samsung is the market leader in the region, but it has been increasingly undercut by strong competition from Chinese vendors such as Transsion Holdings (with its two brands, Tecno and Infinix), InnJoo and Wiko that target budget-conscious customers. Some operators such as Orange and MTN also released sub-USD40 smartphones, which help to overcome the affordability barrier.
  • Demand for data from underserved populations. Expanding coverage to unserved and underserved areas will increase the number of first-time smartphone buyers.
  • End of support for apps on feature phones. The end of support for popular apps (such as WhatsApp and Skype) on old models could accelerate the migration to smartphones more quickly than anticipated.

Operators will also face some challenges in using handsets as a retention tool as the prepaid share of active connections across the region is expected to remain high – at 97% from 2016 to 2021 (South Africa is a slight exception, with a lower prepaid share). High prepaid penetration will limit operators' ability to sell device and mobile service bundles.

In addition, consumers are increasingly purchasing new devices online, and are doing so from their phones. Our survey findings suggest that dissatisfaction with their mobile operators and tight budgets drive a considerable number of mobile users to go online for lower-cost smartphones. Furthermore, online retailer Jumia reported that around 50% of its customers across Africa access its website through a mobile device, and 70% of visits to its Nigerian site were from mobile devices in 2016.3

Operators may be able to appeal to smartphone buyers through promotions and financing with mobile money initiatives and partnerships with banks. Initiatives such as these may create opportunities to bundle services with new devices and increase the chances of consumers considering an operator for their next handset. Operators should also develop their websites as legitimate online sales channels to compete with independent retailers and meet consumers' expectations.

For this analysis, we have limited our sample to users in Ghana, Kenya and Nigeria only.

For more information, please see Analysys Mason’s Smartphones: worldwide trends and forecasts 2016–2021. Available at

Jumia (Nigeria, 2016), White Paper on African Mobile Trends 2016. Available at